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ADVERTISING PAYS 2
HOW ADVERTISING CAN UNLOCK
UK GROWTH POTENTIAL
ADVERTISING PAYS 2
HOW ADVERTISING CAN UNLOCK
UK GROWTH POTENTIAL
Report by Deloitte LLP commissioned by the Advertising Association
Published by the Advertising Association, 7th Floor North, Artillery House, 11-19 Artillery Row, London SW1P 1RT
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This report (the ‘Final Report’) has been prepared by Deloitte LLP (‘Deloitte’) for the Advertising Association in accordance with the contract with them dated
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ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
03
CONTENTS
Foreword by Andy Duncan, Managing Director, Camelot UK Lotteries and President, Advertising Association
05
Executive Summary
08
1 Scope of this report
11
2 Barriers limit SME advertising
14
3 SME advertising investment could accelerate growth
3.1 Business growth and employment
3.2 UK export potential
3.3 Innovation-led growth
18
22
26
28
4 SME views on government support
32
5 Recommendations for industry and government
38
Bibliography40
Appendices43
04
FOREWORD
Andy Duncan, Managing Director, Camelot UK
Lotteries and President, Advertising Association
When Deloitte’s Advertising Pays report launched
in January 2013, for most, the economic game
remained one of survival. What a difference twelve
months makes. Confidence is returning. Growth is
back on the agenda.
So this sequel – Advertising Pays 2: How
advertising can unlock UK growth potential – could
not be better timed. It asks not how advertising
underpins GDP, but where the opportunities to
create growth lie and, critically, how to grab them.
It finds that UK SMEs – the engine room of our
economy – are significantly underweight in their use
of advertising and marketing, and explains why that
is stopping a sector full of talent and innovation from
maximising its potential to create revenues, jobs
and growth.
What is the size of the prize? Consider this.
If smaller businesses could raise their export
performance to just the EU average, it would be
worth over £40 billion to the UK economy. Great
advertising and strong brands will make that sort of
export success more likely. That is why I hope this
report will inspire not only those running SMEs, but
policy-makers and everyone in agencies, brands
and media to reconsider their role in allowing
advertising’s power to unlock growth in
UK businesses.
The Advertising Association wants to see an
environment in which businesses can maximise
their returns on UK advertising investment. This
report teaches us to apply that principle to every
business, no matter what its size. If we do, the
economic game really can change.
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
05
ADVERTISING PAYS 2
HOW ADVERTISING CAN UNLOCK UK GROWTH
SMEs with fewer than 250 employees
99% of UK companies
£1 spent
on advertising
benefits an SME
8x as much as
a larger firm
50% of UK jobs
40%
of UK turnover
#adpays
Sources: Deloitte analysis based on econometric model described in Appendix A and data from BIS,
Nielsen Ad Dynamix and Fame databases
06
POTENTIAL
18%
HOW?
WHAT WOULD
ENCOURAGE SMES
TO ADVERTISE MORE?
1.
Only
of
UK Adspend
19%
of UK SMEs export
25%
of EU
SMEs export
Help with managing the
short-term cost of advertising
2.
More practical advice
and support
3.
A clearer route into the
support that already exists
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
07
EXECUTIVE SUMMARY
The return to growth in the UK economy has been
mirrored by increases in advertising expenditure.
Advertising Pays (2013) demonstrated that, in
2011, advertising added £100 billion to the UK
economy by stimulating competition, innovation and
investment. However, the country now faces the
challenge of maintaining economic momentum and
securing the recovery.
Our economic recovery depends on high
growth SMEs, particularly those medium-sized
businesses most poised for growth, but they
underinvest in advertising and therefore limit
their growth domestically and overseas.
Across the political spectrum, the future of small
and medium-sized businesses (SMEs) has been
recognised as crucial to realising economic
growth. Support for SMEs is at the heart of the
government’s growth strategy, and the government
is investing in improving access to finance for
SMEs. However, there is clear evidence that
SMEs are still struggling to grow. They face
particular challenges in accessing new customers
and expanding into new domestic and
international markets.
1
08
This report considers the role advertising can play
in unlocking the growth potential of the country’s
SMEs and the wider economy. Analysis shows that
spending an additional £1 on advertising would
benefit an SME nearly eight times as much
relative to its size as an equivalent £1 spent by
a larger business.
Despite these potential benefits, SMEs account
for only 18% of total UK advertising spend, even
though they contribute nearly 40% of UK turnover.
The Advertising Association/Deloitte commissioned
YouGov to survey over 1,000 SMEs to explore
barriers to growth and attitudes towards advertising.
YouGov’s research confirmed that SMEs which
advertise are more likely to achieve growth.1 While
those who use advertising consider it beneficial,
those that do not are typically concerned with its
cost and are uncertain about the benefits.
There is naturally a question of causality – whether advertising causes growth or whether growing companies are more likely to advertise. This is addressed in the
appendix and also in the previous study, Deloitte/Advertising Association (2013), Advertising Pays
Advertising already
contributes £100 billion
to the UK economy.
With the right support
for SME growth, the
contribution could be
even greater.
How can the potential of SMEs be realised?
SMEs interviewed and surveyed as part of this
study recognised the importance of advertising to
their future growth prospects. They also identified
a number of areas where additional support would
better enable them to advertise effectively and
achieve their growth potential:
• H
elp with managing the short-term cost of
advertising. SMEs face a difficult trade-off
between short term calls on their cash and the
long term benefits of advertising.
• M
ore practical advice and support. SMEs
expressed a need for more practical help and
support from government and the private
sector in relation to both domestic and
international advertising.
MORE >>
• A
clearer route to the support that already
exists. Many government SME support schemes
are in place, but few SMEs are aware that such
schemes even exist.
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
09
What would more SME advertising do for the UK?
An increase in SME advertising has the
potential to support:
• J
obs & Growth. SMEs already account for the
majority of new job creation in the UK. Supporting
SME success means supporting employment
and growth.
• Innovation. Advertising helps SMEs create
demand for new products, which optimises
returns and promotes further investment
in innovation.
• E
xports. UK SMEs’ exports are limited by a lack
of understanding of overseas markets. While 25%
of the EU’s SMEs are exporters, only 19% of UK
SMEs sell their products and services overseas.
This report shows that if UK SMEs exported at
the same rate as their European competitors,
the value of UK exports could be increased by
£40 billion.
10
However, enabling SMEs to advertise more poses a
series of challenges for both the advertising industry
and the government – both have a role to play in
providing SMEs with the tools and expertise to
grow into new markets and in explaining the
benefits of advertising.
For industry, there is a clear need to provide a
more accessible route to the use of professional
advertising services. For government, there is a
need for broader and more active support for SMEs
during critical periods of their business development
and for support in overcoming SMEs’ short-term
cash flow constraints.
Advertising is an industry for which the UK is
recognised as a world leader. With the UK’s
recovery not yet fully established, it is important
to ensure that the advertising industry’s expertise
helps young businesses with high-growth potential
promote their new products to the world.
Advertising already contributes £100 billion to the
UK economy; with the right support for SME growth
the contribution could be even greater.
1
SCOPE OF THIS REPORT
In 2013, Deloitte published a study commissioned
by the Advertising Association to quantify the
contribution of advertising to the UK economy.
The study, Advertising Pays (2013),2 found that
on average, every £1 spent on advertising
returns £6 in GDP, creating a total impact of
£100 billion in 2011.
To respond to the government’s Plan for Growth 3
and build on the findings of Advertising Pays (2013),
the Advertising Association asked Deloitte to
assess how the advertising industry can work
with government to achieve an even greater
economic contribution.
“Half of all jobs in this country
come from small and medium sized
business. So if we’re to get our
economy going again, we must do
all we can to support them.”
Business Secretary, Vince Cable
MORE >>
This report examines how advertising can contribute
to three core elements of the government’s growth
strategy by:
1.Supporting SME growth
2.Stimulating innovation
3.Boosting exports.
2
Deloitte/Advertising Association (2013), Advertising Pays, available at http://www.adassoc.org.uk/Advertising-Pays
3
Department for Business, Innovation & Skills, and HM Treasury (2011), The Plan for Growth.
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
11
To consider this, the report uses:
• A
n econometric model that explains the role of
advertising in enabling the growth of SMEs. This
builds on the work of Advertising Pays (2013)
to form the core of the report. It addresses
the question of cause and effect – whether
advertising supports the growth of SMEs, or
faster-growing SMEs are more likely to advertise.
• A
survey of over 1,000 UK SMEs which assesses
barriers to growth, attitudes towards advertising
and awareness of existing government schemes.
• A
series of case studies looking at the impact
that advertising has had on innovative and
growing businesses.
In line with Advertising Pays (2013), this report defines
advertising as ‘any paid-for communication intended
to inform and/or influence one or more people’.4
While there is no single definition of an SME, this
study, consistent with the Department of Business,
Innovation and Skills (BIS) approach,5 defines an
SME as a firm with fewer than 250 employees.6
12
4
J.J.D. Bullmore in Bullmore, J.J.D. and Waterson, M.J. (eds) (1983) Advertising Association Handbook.
5
Department for Business, Innovation and Skills (2013), available at
http://webarchive.nationalarchives.gov.uk/+/http://www.bis.gov.uk/policies/enterprise-and-business-support/analytical-unit/statistics
6
Figures included in this report are derived from public data include micro-businesses, including sole traders, unless stated otherwise.
NEXT STEP >>
Microbusinesses
Small
businesses
Medium
businesses
0-9
employees
10-49
employees
50-249
employees
SME’s contribution to employment
Microbusinesses
83% 19%
businesses
jobs
Small
businesses
14% 17%
businesses
jobs
Medium
businesses
2% 15%
businesses
jobs
Source: Deloitte analysis of BIS business population estimates for the UK and regions 2012 including micro-businesses
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
13
2
BARRIERS LIMIT
SME ADVERTISING
SMEs are important to UK growth, but they face
challenges in expanding both in the UK and abroad.7
While there are many factors restricting SMEs’
growth, part of the problem lies in their limited
use of advertising. The SME population
contributes only 18% of advertising spend
in the UK,8 despite accounting for nearly
40% of all turnover.9
SMEs account
for just 18%
of total
advertising
30%
SMEs make up
nearly 40% of the
UK’s turnover
14
18%
40%
7
Department for Business, Innovation and Skills (2013): ‘Guidance: Small business: GREAT ambition’.
8
Based on Deloitte analysis of a sample of firms extracted from Nielsen Ad Dynamix and FAME databases, excluding micro-enterprises.
9
Based on Deloitte analysis of BIS business population estimates for the UK and regions 2012, excluding micro-enterprises.
Only 30%
of SMEs
advertise
SMEs generate
nearly 40% of UK
turnover but they
contribute only 18% of
advertising spend.
To examine the reasons behind this imbalance,
Deloitte and the Advertising Association
commissioned a YouGov survey of over 1,000 UK
SMEs to explore their use of advertising.
The results suggest that many SMEs choose to limit
their advertising expenditure because of concerns
over cost. Two-thirds (67%) of SMEs which do not
advertise believe that advertising is ‘too expensive’
and additionally, 66% believe it is ‘financially risky’.
Cost, however, is not the only factor limiting SME
advertising. In detailed interviews conducted with
SMEs, a more complex picture emerged.
Among businesses with more than
£10 million turnover, fewer than
1 in 2 (46%) currently advertise.12
As a result, it is estimated that fewer than one-third
of SMEs invest in any form of advertising,10 and the
percentage of businesses which advertise is highest
among the largest SMEs. Financial concerns are
not restricted to smaller SMEs.11 Among businesses
with more than £10 million turnover, fewer than
1 in 2 (46%) currently advertise.
MORE >>
10
Based on Deloitte analysis of the Advertising Association/Deloitte survey. Only about a third (35%) of SMEs surveyed invest in advertising. Advertising rates were
calculated for each SME size band and weighted using BIS data on the total number of micro, small and medium businesses in the UK SME population to obtain an
estimate of the advertising rate in the UK SME population.
11
Deloitte/Advertising Association. Survey conducted by YouGov, November 2013.
12
‘SMEs which use paid advertising’ refers to the percentage of advertisers out of total SMEs. ‘SMEs which believe advertising is too expensive’ refers to the percentage
of non-advertisers which believe advertising is too expensive out of total non-advertisers.
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
15
INDUSTRY INTERVIEWS SUGGEST BARRIERS
TO SME ADVERTISING ARE NOT JUST FINANCIAL
Interviews were conducted with SMEs
and a number of industry representatives,
described in Appendix B. Each of these
interviews explored the use of advertising by
SMEs, its role in the growth of businesses
and the barriers to its effective use.
The importance and value of advertising
to companies of all sizes was clearly
recognised. However, interviewees also
noted that limited use of advertising by
SMEs resulted from a range of complex,
interrelated factors.
SMEs may underinvest in advertising relative
to larger firms because they are more riskaverse and cautious about cash expenditure
than larger firms. Their wariness is reinforced
by the difficulty they see in quantifying the
return on their investment.
16
However, their concerns go beyond the
purely financial, and many SMEs are often
less able to extract the maximum value from
their campaigns because:
• T
hey are less likely to develop a
consistent, planned advertising campaign.
By designing each advert in isolation,
many SMEs get less long-term value from
advertising than they otherwise could.
• T
hey are less likely to measure the results
of their advertising, particularly where
doing so requires additional resources.
As a result, it is more difficult for them to
calculate an accurate return on investment
and harder for them to improve and refine
their campaigns over time.
NEXT STEP >>
SMEs are often unable to extract maximum value from campaigns
SMEs are less likely to develop a
consistent, planned advertising
campaign and often design each
advert in isolation.
SMEs are less likely to measure the
results of their advertising. As a result,
it is more difficult for them to calculate an
accurate return on investment and harder
for them to improve and refine their campaigns.
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
17
3
SME ADVERTISING
INVESTMENT COULD
ACCELERATE GROWTH
A number of studies have examined policy options
to support SME growth,13 but few have focused
explicitly on the potential for advertising to help
smaller businesses expand.
64% of SMEs say
their advertising
has been a success.
High-growth SMEs
are more likely
to advertise.
Although this study finds evidence of significant
barriers to the use of advertising by SMEs,
it also finds evidence of benefits to those who
do advertise:
• E
ven among micro-businesses, a majority
(59%) of those which advertise reported a direct
increase in sales, and nearly two-thirds of all
SMEs believe their investment in advertising
represents value for money.14
• M
any high-growth SMEs have had success with
low-cost and local advertising.15 This includes
making use of local radio and newspapers which
offer an opportunity to attract a regionally specific
audience, or online pay-per-click services that
allow SMEs to monitor their advertising closely.
• H
igh-growth SMEs are more likely to
advertise. Some 61% of high-growth SMEs are
knowledgeable about marketing – they advertise,
consult marketing advisers, or have their own
marketing experts. Only 43% of SMEs not
experiencing growth do any of these things.16
18
13
See for example Dods (2013), Growth Britain: Unlocking the potential of our SMEs.
14
Deloitte/Advertising Association. Survey conducted by YouGov, November 2013.
15
High-growth SMEs are those that experienced an increase in turnover or employment of 20% or more in the previous year.
16
Deloitte/Advertising Association. Survey conducted by YouGov, November 2013.
Addressing the barriers to the use
of advertising by SMEs could play
an important role in supporting the
government’s growth strategy.
Increasing growth
and employment of
smaller businesses
MORE >>
Expanding the UK’s
export potential
Enabling stronger
innovation-led growth
across the economy
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
19
Among SMEs which advertise, the strongest
results are achieved when businesses use multiple
advertising channels and develop a structured
campaign, rather than relying on an occasional
advert or just using one channel. The 64% of
all SMEs that believe their advertising has been
a success rises to 83% for those who have a
structured multi-channel campaign.17
“We had to shift our focus in
order to reach a larger audience
and grow further, so we started
using TV advertising and an
integrated marketing strategy. It
has been a real fuel for boosting
growth. Our business started in
2008, and since launching, we now
have over 750,000 customers in
the UK and US.”
Protectyourbubble.com, a medium-sized
online insurance firm
The highest perceived success
rate came from SMEs which used
planned campaigns across
multiple channels.
Percentage of advertiser SMEs whose
advertising strategy has been a success
83%
Using a structured
advertising campaign
71%
Advertising on
multiple channels
61%
Advertising on
just one channel
Source: Deloitte/Advertising Association survey
17
20
Deloitte/Advertising Association. Survey conducted by YouGov, November 2013.
NEXT STEP >>
TECH START-UP DOUBLES IN SIZE AFTER
CROSS-CHANNEL CAMPAIGN
BLOOM FM
Bloom FM is a music-borrowing mobile
app founded in 2012.
THE CAMPAIGN
Bloom used offline advertising to build brand
awareness and drove app downloads with
targeted online ads. In 2013, Bloom launched
its first television campaign.
THE RESULTS
Bloom FM has increased its registered users
to 750,000 since its launch 12 months ago.
It has also had interest from a number of
large mobile, ISP and retail companies about
potential commercial partnerships.
Source: Bloom FM interview
“Our integrated
marketing strategy
coupling both traditional
and digital advertising
has been essential to
growing our business
and building a brand.”
David Mollison, Bloom FM
Registered users increased
to 750,000 since its launch.
Partnership opportunities
with mobile, ISP and
retail companies.
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
21
3
.1
BUSINESS GROWTH
AND EMPLOYMENT
Small and medium-sized enterprises sustain
and create millions of jobs across the economy.
Between 1998 and 2010, SMEs accounted for 77%
of all job creation.18
However, SMEs also face significant challenges,
and only around 65% of UK SMEs survive their first
three years, threatening the stability of job creation
and employment in the UK.19
22
One of the most important factors in the
sustainability and success of these firms is their
capacity to manage cash flow alongside growth.
Those that are most successful and likely to survive
achieve growth in demand while managing costs.
While advertising is important for all businesses,
it is particularly important for the growth and
survival prospects of SMEs, because of its
potential to raise awareness of the business and
its products or services.
18
4 4% of this arises through increased employment in existing SMEs, with the remaining 33% arising through start-ups. Department for Business, Innovation and Skills (2011),
Job Creation and Destruction in the UK: 1998–2010.
19
University of Surrey and Kingston Smith (2012), Success in Challenging Times: Key Lessons for UK SMEs.
Between 1998 and 2010,
SMEs accounted for
77% of all job creation.
MORE >>
BOLD ADVERTISING ON A LOW BUDGET
TRANSFORMED RADLEY + CO.
RADLEY
Radley is a premium British handbag
manufacturer, founded in 1998.
THE CAMPAIGN
Radley played on its distinctive designs in
its ‘Truly Radley Deeply’ press campaign.
Spending significantly less than rivals,
Radley aimed to get customers and
influential fashion buyers talking about
the brand.
THE RESULTS
‘Truly Radley Deeply’ was hugely
successful, paying for itself nearly six times
over through increased sales. The value of
Radley tripled in less than two years, and
the business was sold for over £130 million.
Source: IPA (2008), ‘Radley – From bags to riches’.
6x
Increased sales nearly
6 times campaign cost.
3x
Radley’s value tripled in less
than two years.
£130m Business sold for over £130m.
“The benefits of the Truly Radley
Deeply campaign go way beyond
strong sales and awareness gains.
Radley continued to take market
share in the UK and our advertising
strategy produced some outstanding
results for the company.”
Roger Best, Radley
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
23
An additional £1 spent
on advertising by an
SME has eight times
the effect on sales
relative to its size.
Advertising Pays (2013) showed how advertising
does more than just benefit individual businesses
by helping them generate sales; advertising can
drive growth for the economy as a whole by
helping businesses communicate with consumers,
promoting innovation, enhancing competition and
expanding and developing markets. This report
reveals the particularly powerful impact advertising
has on SMEs’ business prospects.
8x
Deloitte’s econometric analysis estimates that an
additional £1 spent on advertising by an SME
has eight times the effect on sales relative to its
size, compared to the impact of an extra £1 for a
large business.20
20
24
See Appendix A. Results relate to change in marginal advertising spend by SMEs which advertise. Appendix A also shows how marginal and average effects differ
from each other.
ADVERTISING STIMULATES GROWTH FOR GÜ
GÜ PUDDINGS
Gü is a premium dessert company founded in 2003.
THE CAMPAIGN
The 2011 ‘Give in to Gü’ campaign repositioned the
puddings as an everyday guilt-free treat aimed at
both new and existing customers.
THE RESULTS
1.84
£6.5m
The campaign was a great success, achieving a
return of £1.84 for every £1 spent. This boosted
revenues by £6.5 million, and put Gü on course
to double its sales within three years.
Source: IPA (2012), ‘Gü: Give in to the power of TV. Give in to Gü’.
2x
A return of £1.84 for
every £1 spent.
Revenues boosted
by £6.5m.
Gü on course to
double its total sales
within 3 years.
NEXT STEP >>
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
25
3
If UK firms export at
the same rate as their
European counterparts,
UK exports could be
increased by £40bn.
.2
UK EXPORT POTENTIAL
Policy makers and commentators have long argued
the need to increase UK exports.
“Improving the UK’s export
performance is central to our
future prosperity. With public
finances constrained and domestic
consumers still burdened by
debt, one of our best prospects for
sustainable economic growth is
through increased exports.”
CBI, The Only Way is Exports, April 2013
However, while there is a clear desire to increase
exports, the most recent government data shows
that only 19% of UK SMEs currently export,
compared to 25% of EU SMEs.22
The SMEs questioned for this report identify
uncertainty over demand as the most significant
barrier to exporting, ahead of financial and
regulatory concerns:
“Overseas advertising to promote
export sales would help but we
have no idea how to go about it.”
Manufacturing business, South of England 23
UK businesses are broadly aligned with this
objective. In the government’s most recent SME
survey, companies identified a sales-oriented export
strategy as the second most important aspect in
delivering growth (69%), behind increasing the skills
of their workforce (75%).21
21
26
Department for Business, Innovation and Skills (2013), Small Business Survey 2012: SME Employers.
22
Department for Business, Innovation and Skills (2013), Small Business Survey: Growth Special Report.
23
Deloitte/Advertising Association survey, conducted by YouGov, November 2013.
24
ibid.
NEXT STEP >>
Firms which overcome concerns about
demand uncertainty export at more
than double the rate of other exporters.
Many firms recognise that advertising and
marketing represent part of the solution, but express
confusion over how to achieve this:
“In foreign markets, knowing
which publications/conferences are
the most relevant for the product
being sold into that market [would
help increase exports].”
SMEs who do not face
demand uncertainty
rely more on exports.
21% of their turnover
comes from exports.
Exports make up
only 8% of turnover
among SMEs who
are concerned about
demand overseas.
21%
8%
Health and social work business, Midlands24
The survey shows that SMEs which are uncertain
about overseas demand export at less than half the
rate of other exporters.25 The cost of this to the UK
is significant.
If UK SMEs, by overcoming uncertainty about
demand, were able to export at the same rate as
their European counterparts, UK exports could
be increased by £40 billion.26
Source: Deloitte/Advertising Association survey
24
Deloitte/Advertising Association survey, conducted by YouGov, November 2013.
26
Deloitte analysis. This figure is a broad estimate designed to illustrate the significance of the opportunity. Export increase assumes all additional exports are incremental
and there is no cannibalisation. It also assumes that additional firms export at same rate as current SME exporters. The figure is calculated by taking the difference between
export rates of UK and EU SMEs and multiplying this by UK SME export turnover. SME export turnover is estimated by taking SME share of total turnover and weighting it by
the proportion of SMEs which are exporters. ONS (2013), ‘Annual Business Survey, exporters and importers, GB, 2011’, available from
http://www.ons.gov.uk/ons/rel/abs/annual-business-survey/characteristics-of-exporters-and-importers--gb--2011/index.html
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
27
3
.3
INNOVATION-LED GROWTH
“[Small businesses] are the
backbone of our economy. They
create the vast majority of jobs,
and export their goods and
products across the world. They
are at the heart of innovation,
which is often copied by larger
businesses, and drive growth
throughout the United Kingdom.”
Simon Danczuk, MP for Rochdale27
Small businesses are recognised as crucial to the
government’s achievement of its Plan for Growth,
and they generate 40% more of their sales from
innovative products than larger firms.28 However,
while SMEs are an important source of innovation,
they are among the most concerned about the
financial risks of innovation and the uncertainty of
demand for their products.
28
Small businesses generate 40% more revenue
from innovative products than large firms but small
businesses are 30% more likely to be concerned
that the costs of innovation are high.29
More effective use of advertising could help boost
the UK’s innovative potential by helping to increase
demand for innovative products and services, and
reduce the risks of investing in innovation.
Advertising also plays a wider role in supporting
innovation. It communicates the presence of new
products to consumers and, through stimulation of
demand for those products, increases the incentives
for firms to invest in future innovations.30
27
UK Parliament (2013), ‘Daily Hansard debate’, available at http://www.publications.parliament.uk/pa/cm201314/cmhansrd/cm131128/debtext/131128-0003.htm
28
Specifically, 40% more of small businesses’ turnover relates to the sale of innovative products, relative to larger firms, based on new-to-market products. Source: Department
for Business, Innovation and Skills (2013), UK Innovation Survey 2011. Small businesses are those with <50 employees; large businesses are those with 250+ employees.
29
Data drawn from Department for Business, Innovation and Skills (2013), UK Innovation Survey 2011.
30
This relationship has been widely established, including in the seminal paper: Borden, N.H. (1942), The Economic Effects of Advertising, Chicago.
Small businesses
generate 40% more
of their sales from
innovative products.
MORE >>
COST-EFFECTIVE ADVERTISING BOOSTS
RIVERFORD’S CHRISTMAS SALES
RIVERFORD
Riverford is an award-winning company with an
innovative scheme to deliver organic produce.
THE CAMPAIGN
Riverford used social media advertising to run
competitions and promote Christmas products
to new and existing customers in the run-up to
Christmas 2013.
THE RESULTS
Riverford had 2,000 new visitors to its website
and quickly sold out of the mini gift hamper that
was being advertised. Sales of promoted products
increased by 7% in just one day, and half of all
competition entrants opted to hear more about
Riverford thus growing its prospective customer base.
2,000 new website
visitors, and sold out of
the advertised product.
Sales of promoted
products increased by
7% in a day.
50% of competition
entrants opted to
hear more.
Source: Riverford interview
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
29
Advertising unlocks
value from new
innovation.
Allows
investment
in future
innovation
Communicates
the presence
of innovations
1.
Speeds up
consumers’
adoption and
use of
innovative
products
2.
Stimulates
product
differentiation
which increases
consumer choice
30
6.
5.
3.
4.
Helps ensure
the most
innovative
businesses
thrive
Increases
revenue from
innovative
products
NEXT STEP >>
MARKET FRESH
RECEIVED BY:
SIGNATURE:
ADVERTISING GENERATES DEMAND IN
NEW MARKETS
HUBBUB
Hubbub is a home delivery service for independent
food stores launched in 2010.
THE CAMPAIGN
Hubbub experimented with an outdoor advertising
campaign to build awareness and increase demand
in new markets.
THE RESULTS
The campaign not only generated additional sales,
but gained the attention of the mainstream press.
Increased exposure led to over 6,000 website hits
within 12 hours.
“We wanted to scale
the business fast and a
visible ad campaign was
a key part of building
brand awareness and
generating interest from
customers, suppliers and
the media.”
Marissa Leaf, Hubbub
Source: Hubbub interview
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
31
4
SME VIEWS ON
GOVERNMENT SUPPORT
SMEs were also surveyed by YouGov on the issues
affecting their businesses and their awareness of
existing government support schemes. The findings
identified a number of areas where SMEs feel
additional support is needed from government and
the advertising industry.
Provide more practical help and support with
domestic and international advertising
A strong and consistent message from SMEs is
the need for more structured support to help them
advertise, both domestically and internationally.
SMEs expressed a desire to grow into new markets,
but uncertainty over how best to achieve it.
“Our business used to grow
regularly with support on general
business strategy and individual
campaigns from Business Link.
The closure of Business Link has
been a great loss, and their
unbiased expertise is not something
we can afford to invest in.”
Service business, East of England31
Help manage the short-term cost of advertising
As the survey and detailed interviews highlighted,
many SMEs have difficulty in managing the tradeoff between short-term cash constraints and
the benefits of advertising. Advertising is widely
perceived as ‘risky’.
“SMEs are cash conscious and
need to see immediate returns to
their decisions.”
Advertising executive, London 32
32
31
Deloitte/Advertising Association. Survey conducted by YouGov, November 2013.
32
ibid.
33
ibid.
However, most SMEs recognise the value
advertising can provide, and they seek help
managing the costs to mitigate the perceived
financial risks.
“Tax breaks for marketing
expenditure [would help].”
Professional services business, Scotland33
While SMEs articulated a need for support, low
awareness of how to access existing schemes is
limiting their ability to use them effectively. Even
among firms interested in increasing exports, the
survey revealed only 25% use, or intend to use,
existing support programmes and services such as
UK Trade and Investment (UKTI), which helps UKbased businesses access international markets.
Make it easier to find the support that
already exists
The government estimates that there are over
700 support and funding schemes, services and
initiatives for SMEs,34 as well as numerous private
sector programmes. Many SMEs do not know which
organisation to turn to when they need support.
MORE >>
“There are too many
programmes to make a sound
business decision.”
Manufacturing business, London35
34
Major support schemes for SMEs include GrowthAccelerator, Passport to Export and apprenticeships. GOV.UK (2013), ‘Finance and support for your business’ available at
https://www.gov.uk/business-finance-support-finder/search
35
Deloitte/Advertising Association. Survey conducted by YouGov, November 2013.
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
33
Perceptions of key goverment support schemes
Perceptions of UKTI; SMEs potential exporters
6%
24%
19%
Perceptions of GOV.UK, all SMEs
9%
21%
51%
I’ve never heard of this scheme
I’ve heard of this scheme but don’t know much about it
I understand what this scheme can do for me
I have used or intend to use this scheme in the next 12 months
Source: Deloitte/Advertising Association. Survey conducted by YouGov, November 2013.
34
30%
40%
There are over 700
support and funding
schemes, services
and initiatives for
SMEs. Many SMEs
do not know which
organisation to
turn to when they
need support.
MORE >>
PROVIDING ADVERTISING & MARKETING
ADVICE TO SMES
TAG DIGITAL
Tag Digital is a digital agency founded in
2011, with offices in London and Glasgow.
Positive feedback
from SMEs.
THE PROGRAMME
Tag developed a training programme
with local councils in Scotland to deliver
advertising, marketing and digital expertise
to local SMEs. The programme was
supported by local government funding.
Expanded to
other councils.
THE RESULTS
The programme received positive feedback
from small businesses and was quickly
expanded to other councils in Scotland.
Many of the SMEs which participated in the
training went on to work with Tag Digital to
create digital marketing strategies.
Many SMEs in the
training created
digital marketing
strategies with Tag.
Source: Tag Digital interview
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
35
ADVERTISING HELPED SMALL BUSINESSES
REACH BIG AUDIENCES.
SMALL BUSINESS SATURDAY
The Small Business Saturday initiative
encouraged consumers to celebrate and
support small businesses.
47%
Nearly half of all
shoppers, 47%, were
aware of the initiative
THE CAMPAIGN
The campaign, in association with
American Express, used national TV, local
and national radio and press to encourage
people to shop in independent and local
shops on 7 December 2013.
THE RESULTS
Nearly half of all shoppers were aware of
the initiative and, of those, 57% said they
had visited an independent shop. Reports
estimated that the day boosted the UK’s
independent retailers’ takings by £468 million.
Sources: City AM (2013) and Telegraph (2013)
36
57%
£ 4 6 8m
57% of those said
they had visited an
independent shop
Consumer support
equated to £468
million being spent
in independent shops
on the day.
NEXT STEP >>
INTERNATIONAL SCHEMES TO SUPPORT
ADVERTISING
In the UK there are over 700 different government schemes designed to support SMEs. Notable
schemes include Start-up Loans, Growth Accelerator and Mentors Me, as well as the British Business
Bank and Growth Vouchers initiatives which are due for launch in 2014. There are also a number of
regional and industry-specific schemes which are run by local authorities.
Schemes that explicitly provide advertising and marketing advice for companies looking to grow, either
domestically or internationally, are limited. Other governments around the world have provided such
support through a range of interventions.
Financial support for SME exports
Australia’s Export Market Development Grants
scheme helps SMEs enter overseas markets
by reimbursing up to 50% of eligible export
promotional expenses above AUS$10,000.
Providing SMEs meet qualifying criteria, grants
can be used to pay for overseas advertising and
to hire marketing consultants in foreign markets.36
Italy and Spain have historically offered financial
incentives for market research, marketing and
promotional activities.37
Export advice online and in person
The United States government operates
Export.gov, which provides country-specific
market research and advertising advice. It also
offers an online community for exporters to
share advice. The US Commercial Service has a
network of trade and industry specialists in over
100 cities in the US and over 80 countries staffed
with trade specialists that can help businesses
discuss and plan export strategies.39
Business advice and funding for
capacity development
New Zealand Trade and Enterprise has
established 14 regional business partners across
the country as hubs of business development and
R&D knowledge. Partners work with businesses
to provide advice, support and access to funding,
including NZTE Capability Development Vouchers
that can be used to pay up to 50% of the cost of
capacity development and training in areas such
as exports and marketing.38
Market access information and support
Many governments, including those in Czech
Republic, France, Finland and Hungary, offer
market access intelligence and/or business
promotional services.40
36
Australian Government (2013), ‘Export market development grants’ available at http://www.austrade.gov.au/Export/Export-Grants/What-is-EMDG
37
United Nations Industrial Development Organisation (2005), Support Systems for Export Consortia.
38
New Zealand (2013), ‘Regional business partners’ available at http://www.business.govt.nz/support-and-advice/advice-mentoring/regional-business-partners
39
Based on analysis of http://www.export.gov
40
OECD (2009), Top Barriers and Drivers to SME Internationalisation.
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
37
5
RECOMMENDATIONS
FOR INDUSTRY AND
GOVERNMENT
Although a vital part of the UK economy and an
essential element in the UK’s growth strategy,
SMEs have the potential to play an even greater
role in the UK’s economic resurgence. A number
of previous studies41 have examined potential
factors that may assist growth, but few focus on
the role of advertising.
These pressures are significant and apply to
medium-sized businesses – those most poised for
growth – as well as the smallest SMEs. Of firms
with more than £10 million turnover, fewer than
50% currently conduct any advertising. Of those,
30% choose not to advertise because the cost is
considered prohibitive.42
This is important, as this report has shown that
an increase in advertising spend by £1 for a UK
SME would have eight times the impact on its
sales growth rate compared to £1 spent on
advertising by a larger firm. Despite this potential
impact, and the fact that SMEs contribute 40%
of UK turnover, they account for only 18% of total
advertising expenditure.
UK SMEs are also significantly less likely to export
compared to their European competitors, with only
19% selling their goods and services overseas,
compared to 25% of EU SMEs. This potentially
costs the UK economy as much as £40 billion.
SMEs report that uncertainty about international
demand is one of the key barriers that prevent them
from increasing their exports. Despite this, only a
quarter of those surveyed understood or accessed
the support offered by organisations such as UK
Trade and Investment.
The survey conducted for this report and supporting
interviews point to a range of interrelated factors
for this underinvestment in advertising. These
include cost pressures on businesses, particularly
when balancing short-term cost pressures against
longer-term gains.
38
41
See, for example, Dods (2013), Growth Britain: Unlocking the potential of our SMEs.
42
Deloitte/Advertising Association. Survey conducted by YouGov, November 2013.
SMEs have the potential
to play an even
greater role in the UK’s
economic resurgence.
When asked how they could be helped to overcome
these challenges, SMEs articulated a need for:
1.Support in meeting the short-term cost
pressures of investing in advertising
2.Practical advice and support with the
marketing of their businesses, both
domestically and internationally
3.A clearer route to accessing existing support
provided by government.
The findings of this report raise important
challenges for both the advertising industry and
government. SMEs clearly need better support
and education to understand the benefits that
advertising can offer. The industry must do more
to explain the commercial benefits of advertising
and consider ways to make its expertise more
accessible to companies of all sizes.
SMEs also pointed to a need for more accessible
support from central government, particularly
during critical phases in their growth. This could
take the form of specialist support and education
for SMEs or first-time advertisers, advice on
how to use advertising to help them enter
overseas markets, or taking steps to mitigate the
perceived risk of advertising among companies
with high growth potential.
The policy response to these challenges is likely to
require close coordination between the advertising
industry and government. However, if these issues
can be overcome, the potential benefit for the UK
economy is considerable.
The evidence shows that many SMEs have a
strong appetite for growth and, with the right
support from industry and government, they also
have considerable potential to help the UK innovate,
export and grow.
Advertising already contributes £100 billion to the
UK economy. The findings from this study suggest
the potential is even greater.
REFERENCE >>
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
39
BIBLIOGRAPHY
Arellano, M. and Bover, O. (1995), ‘Another look
at the instrumental variable estimation of
error-components models’, Journal of Econometrics,
Vol. 68, pp. 29–51.
Department for Business, Innovation and Skills
(2013), http://webarchive.nationalarchives.gov.
uk/+/http://www.bis.gov.uk/policies/enterprise-andbusiness-support/analytical-unit/statistics
Australian Government (2013), ‘Export market
development grants’, http://www.austrade.gov.au/
Export/Export-Grants/What-is-EMDG
Department for Business, Innovation and Skills
(2013), Small Business Survey 2012:
SME Employers.
Borden, N.H. (1942), The Economic Effects
of Advertising.
Department for Business, Innovation and Skills
(2013), Small Business Survey: Growth
Special Report.
Bullmore, J.J.D. and Waterson, M.J. (eds) (1983),
Advertising Association Handbook.
Cameron, A. C. and Trivedi, P. K. (2005),
Microeconometrics: Methods and applications.
CBI (2003), The Only Way is Exports.
City AM (2013) ‘Small Business Saturday boosts
UK by £468m’, 10 December, http://www.cityam.
com/article/1386679037/small-business-saturdayboosts-uk-468m
Deloitte/Advertising Association (2013),
Advertising Pays.
Deloitte/Advertising Association (2013), Survey
conducted by YouGov.
Department for Business, Innovation and Skills
(2011), Job Creation and Destruction in the UK:
1998–2010.
40
Department for Business, Innovation and Skills
(2013), UK Innovation Survey 2011.
Department for Business, Innovation and Skills
(2013), ‘Small business: GREAT ambition’.
Department for Business, Innovation and Skills, and
HM Treasury (2011), The Plan for Growth.
Dods (2013), Growth Britain: Unlocking the
potential of our SMEs, http://www.dodsmonitoring.
com/downloads/Misc_Files/Growth_Britain_
Report-2013.pdf
FAME (2013), Database, https://fame.bvdinfo.com/
version-2013116/Home.serv?product=fameneo
GOV.UK (2013), ‘Finance and support for
your business’,
https://www.gov.uk/business-finance-support-finder/
search
GOV.UK (2013), ‘Government on the side of small
business’, https://www.gov.uk/government/news/
government-on-the-side-of-small-business
Export.Gov (2013), http://www.export.gov
IPA (2008), ‘Radley – From bags to riches’.
IPA (2012), ‘Gü: Give in to the power of TV. Give
in to Gü’.
Mariel, P., López, C. and Fernández-Aguirre,
K. (2006), ‘Sales-advertising relationship: an
application of panel data from the German
automobile industry’, Prague Economic Papers, Vol.
1, pp. 29-43.
New Zealand (2013), ‘Regional business partners’,
http://www.business.govt.nz/support-and-advice/
advice-mentoring/regional-business-partners
Nielsen (2013), Ad Dynamix Database, http://www.
nielsen.com/uk/en.html
OECD (2009), Top Barriers and Drivers to SME
Internationalisation, http://www.oecd.org/cfe/
smes/43357832.pdf
Telegraph (2013) ‘Special day boosts small
businesses’, 9 December, http://www.telegraph.
co.uk/finance/businessclub/10506327/Special-dayboosts-small-businesses.html
UK Parliament (2013), ‘Daily Hansard debate’, http://
www.publications.parliament.uk/pa/cm201314/
cmhansrd/cm131128/debtext/131128-0003.htm
United Nations Industrial Development Organisation
(2005), Support Systems for Export Consortia,
http://www.unido.org/fileadmin/user_media/
Services/PSD/Export_Consortia/Compendium_
ENG.PDF
University of Surrey and Kingston Smith (2012),
Success in Challenging Times: Key Lessons for UK
SMEs, http://www.surrey.ac.uk/sbs/files/Success_
in_Challenging_Times_Report%20.pdf
YouGov (2013), ‘Panel methodology’, http://research.
yougov.co.uk/services/panel-methodology
ONS (2013), ‘Annual Business Survey, exporters
and importers, GB, 2011’, http://www.ons.gov.uk/
ons/rel/abs/annual-business-survey/characteristicsof-exporters-and-importers--gb--2011/sty-exportersand-importers-in-great-britain.html
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
41
42
APPENDICES
Appendix A: Detailed econometric methodology
44
Appendix B: Survey methodology
B.1 Overview
B.2 Description of the sample
B.3 Supplementary interviews
47
47
48
49
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
43
APPENDIX A
DETAILED
ECONOMETRIC
METHODOLOGY
This appendix presents the details of the econometric estimation carried out in order to measure the impact of
advertising on firms’ sales. Specifically this analysis includes estimating:
• the impact of advertising on sales and firm growth
• the relationship between firm size and the effectiveness of advertising.
THE DATASET EMPLOYED
Data was collected from a number of sources in order to obtain a quantitative description of advertising spend across
the UK. The dataset includes data on firm sales (the dependent variable of interest) and advertising expenditure at
the firm level. A number of other firm characteristics that influence sales (such as the number of employees) were also
included. The main variables used in the analysis are summarised in Table 1.
All data was collected annually at the firm level for UK firms (firms with main operations based in the UK) for years
2008–12. The source databases included Nielsen Ad Dynamix43 and FAME.44
An initial dataset of countries was constructed by collecting publicly available data from the World Bank’s World
Development Indicators.60 This was supplemented by data from the Advertising Association, WARC and Nielsen,
as well as by data from the International Labour Organization (KILM and LABORSTA). This generated a panel of 17
countries comprising the world’s largest economies as well as some developing economies, spanning a 14-year period
from 1998 to 2011.
Table 1: Main variables used in the analysis
44
Variable
Description
Source
Advertising
Annual advertising spend by firm (GBP constant prices,
excludes Internet searches)
Nielsen Ad Dynamix
Turnover
Annual turnover by firm (GBP constant prices)
FAME
Number of employees
Total number of employees by firm
FAME
43
Nielsen (2013), Ad Dynamix Database, available from http://www.nielsen.com/uk/en.html
44
FAME (2013), Database available from https://fame.bvdinfo.com/version-2013116/Home.serv?product=fameneo
THE MODEL
That advertising positively impacts sales is easily understood. An example from the literature shows that in the
German car market, the impact of ad spend varies across market segments and advertising media, with radio and
TV advertising having a positive impact on sales in the medium-sized car segment. Competitors’ advertising also
had a positive impact on car sales in this segment, possibly because competitors’ ads describing innovations had
an informative effect across all brands.45 At a national level, Deloitte and the Advertising Association have previously
shown that £1 spent on advertising generates on average £6 across the economy.46 While these studies have
demonstrated that advertising can have a positive impact on growth, this study adopts a novel methodology to test for
advertising impacts at the firm level.
A variety of specifications were tested, the basic model was a random effects estimation that took the following
functional form:
On the left-hand side is turnover (firm sales), which is expressed as a function of variables including advertising
expenditure and employment, as well as time/year dummies.47
Time-invariant firm characteristics and other factors may impact firms’ sales, such as quality of management, region of
operation, sector, quality of products, etc. These effects are taken into account by comparing the basic model to a fixed
effects model, which controls for unobserved firm characteristics.
The model was estimated using fixed and random effects methods, as explained in the section on diagnostic tests.
The model allows us to estimate the absolute and marginal impact of changes in advertising expenditure on turnover,
depending on the size of the firm.
The model supports the following findings:
• The absolute impact of advertising is greater the larger the size of the firm. For every £1 spent on advertising, sales
increase by £6 on average across all firm sizes. Comparing the sample for subsets of small and large firms, the
average impact of advertising on sales is an increase of £10 for large firms and £2 for SMEs. This is an indication
that larger firms are more effective in transforming ad spend into turnover because of their size.
• Advertising increases turnover at a greater speed in smaller companies. That is, SMEs can increase growth through
advertising more than larger firms (for every £1 spent on advertising, the growth in turnover is approximately eight
times as great for SMEs compared to large firms).
45
P. Mariel, C. López and K. Fernández-Aguirre (2006), ‘Sales-advertising relationship: an application of panel data from the German automobile industry’,
Prague Economic Papers.
46
Deloitte/Advertising Association (2013), Advertising Pays, available at http://www.adassoc.org.uk/Advertising-Pays
47
Table 2 below describes the various alternative specifications that were tested.
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
45
Table 2: Econometric results from base model (unbalanced panel)
Log (Turnover)
Coefficient
AdvExpit
2.24e-8**
Employment
0.85***
T2011
0.19**
Constant
5.56***
Observations
216
Note: *** significant at 1% level, ** significant at the 5% level.
DIAGNOSTIC TESTS
To ensure the model produced the correct specification, it was tested for bias due to unobserved characteristics, bias
due to endogeneity and for non-linearity. The specification tests and model comparisons are summarised in Table 3.
The findings show that the random effects model provides an appropriate specification to measure the impact of
advertising on firm turnover across a range of firm sizes; the particular specification chosen resulted from a comparison
to alternative model specifications, as explained below.
Table 3: Specification tests and alternative models
Model
Rationale for this test
Result
Linear/non-linear functional forms. To test for nonlinearities we applied Box-Cox estimation and tried
out different polynomial forms for this model.
Relationship between
advertising and sales
might be non-linear.
Log turnover is linear in advertising
for observed level of spending so a
non-linear function is not required.
Fixed effects estimation method. See for example
Cameron, A. C. and Trivedi, P. K. (2005),
Microeconometrics: Methods and applications.
Allows us to test whether
results are biased
by unobserved firm
characteristics.
Results are qualitatively similar to
random effects estimator.
Arellano and Bond estimation method and
functional form. See Arellano, M. and Bover, O.
(1995), ‘Another look at the instrumental variable
estimation of error-components models’, Journal of
Econometrics, Vol. 68, pp. 29–51.
Tests for the endogeneity
of advertising with respect
to turnover.
Results are qualitatively similar to
random effects estimator.
Source: Deloitte analysis.
46
APPENDIX B
SURVEY
METHODOLOGY
B.1 OVERVIEW
YouGov was commissioned to survey 1,053 SMEs in order to gain a better understanding of factors influencing
growth, smaller businesses’ experiences with advertising and their views on the role of government and advertising in
supporting growth. The survey was conducted online between 28 October and 4 November 2013.48
Questions included in the survey covered four core categories:
• Firm profile: region, industry, size and growth trajectory
• Advertising: use or intended use of advertising, nature of advertising strategy, and impact of advertising
• Exports: current and planned export operations and barriers to exporting
• Policy: awareness, understanding and use of government support programmes, and reactions to proposed policies.
A copy of the survey and results are available at http://cdn.yougov.com/cumulus_uploads/document/t41mikca0j/Resultsfor-Advertising-Association-(Marketing-and-Growth)-OMI013-375-05112013.pdf.
48
For details of the underlying database of contacts and the selection method, see http://research.yougov.co.uk/services/panel-methodology/
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
47
B.2 DESCRIPTION OF THE SAMPLE
Coverage was obtained across a range of industries and locations and included an over-sampling of medium-sized
businesses, defined by YouGov as having 50 to 249 full time employees, who made up 18% of the sample.
Table 4: Coverage of sample by industry
Industry
Small
(1–49 employees)
Medium
(50–249 employees)
Total
Accountancy
22
5
27
Construction
79
11
90
Education
30
9
39
Financial services
47
12
59
Hospitality and leisure
39
10
49
IT & telecoms
116
21
137
Legal
30
13
43
Manufacturing
90
38
128
Media/ marketing/ advertising/ PR & sales
76
17
93
Medical & health services
18
6
24
Other
152
25
177
Real estate
42
4
46
Retail
98
14
112
Transportation & distribution
21
8
29
860
193
1053
Region
Small
(1–49 employees)
Medium
(50–249 employees)
Total
Scotland
47
13
60
Wales
28
7
35
North England
157
29
186
Midlands
125
29
154
East England
67
11
78
London
154
48
202
South England
265
55
320
17
1
18
860
193
1053
All firms
Table 5: Coverage of sample by region
Elsewhere (i.e. outside Great Britain)
All firms
48
B.3 SUPPLEMENTARY INTERVIEWS
To further inform the study, in-depth interviews were conducted with industry stakeholders and high-growth SMEs.
Industry stakeholders included representatives from the following organisations:
• AMV BBDO (advertising agency)
• Advertising Standards Authority
• Barclays
• British Chambers of Commerce
• BT
• Department of Culture, Media & Sport
• Golley Slater (advertising and PR agency)
• Institute of Practitioners in Advertising
• Nesta
Telephone interviews were conducted with representatives from a variety of SMEs across the UK:
• Beyond Dark
• Bloom.fm
• Braant Accounting
• Descience
• Fever Tree
• Hubbub
• OutSec
• Protectyourbubble.com
• Tag Digital
ADVERTISING PAYS HOW ADVERTISING CAN UNLOCK UK GROWTH POTENTIAL
49
Report layout and design by Mark Terry at Etcx3. etcx3.com
The Advertising Association and Credos would like to thank the following for their support
in producing this report:
James Best, Chairman, Credos
Credos Advisory Board
Our member organisations
The Advertising Association’s Front Foot group
And the following for their contributions to the report:
Adam & Eve DDB; Advertising Standards Authority; AMV BBDO; Baby Grand Marketing; Barclays; Beyond
Dark; Bloom FM; Braant Accounting; British Chambers of Commerce; BT; CBI; Department of Culture, Media
and Sport; Descience; Fever Tree; Golley Slater; Gü Puddings; Hubbub; Institute of Practitioners in Advertising;
Nesta; Ogilvy Group; OutSec; Protect Your Bubble; Radley and Co; Rhizome PR; Riverford and Tag Digital.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by
guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please
see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
Deloitte LLP is the United Kingdom member firm of DTTL.
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and its registered office at 2 New Street Square, London, EC4A 3BZ, United Kingdom.
Tel: +44 (0) 20 7936 3000 Fax: +44 (0) 20 7583 1198.
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50
About the Advertising Association
Advertising is a vital enabler in the economy, underpinning at least £100 billion of UK GDP.
The Advertising Association unites those businesses and industries which contribute to that effect – the
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